NEW YORK —
Under the settlement, a significant amount of the money, $3.75 billion, would go to people who have already lost their homes, making it potentially more generous to former homeowners than a broad-reaching pact in February between state attorneys general and five large banks. That set aside $1.5 billion in cash relief for Americans.
Most of the relief in both agreements is meant for people who are struggling to stay in their homes and need the banks to reduce their payments or lower the amount of principal they owe.
The $10 billion pact would be the latest in a series of settlements that regulators and law enforcement officials have reached with banks to hold them accountable for their role in the 2008 financial crisis, which sent the housing market into the deepest slump since the Great Depression. As of early 2012, about 4 million Americans had been foreclosed upon since the beginning of 2007, and a huge number of abandoned homes swamped many states, including California, Florida, and Arizona.
Federal agencies, including the Securities and Exchange Commission and Justice Department, are still pursuing banks for their packaging and sale of mortgage securities that imploded in the financial crisis.
Housing advocates were largely unaware of the latest rounds of secret talks, which have been occurring for roughly a month. But some have criticized the government for not dealing more harshly with bankers in light of their lax standards for making loans and packaging them as investments, as well as their problems with modifying loans and processing foreclosures.
A deal could be reached by the end of the week between the 14 banks and the nation’s top banking regulators, led by the Office of the Comptroller of the Currency, four people with knowledge of the negotiations said. It was unclear how many current and former homeowners would receive money or when it would be distributed.
Told on Sunday night of the imminent settlement, Lynn Drysdale, a lawyer at Jacksonville Area Legal Aid and a former cochairwoman of the National Association of Consumer Advocates, said: ‘‘It’s certainly a victory for consumers and could help entire neighborhoods. But the devil, as they say, is in the details, and for those people who have had to totally uproot their lives because of eviction it may still not be enough.’’
Representative of banking regulators did not return calls for comment on Sunday.
The biggest action against the banks for foreclosure-related abuses has been the $26 billion settlement between the five largest mortgage servicers and the state attorneys general, Justice Department, and Department of Housing and Urban Development. That deal cleared allegations that arose in 2010 that bank employees were churning daily through hundreds of documents used in foreclosures without properly reviewing them for accuracy.